Indiana lawmakers will again weigh Ball State takeover of school district

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A bill that would allow for a more expansive takeover of two fiscally distressed Indiana school districts is back on the menu after lawmakers voted to take up the measure when they meet during a special legislative session later this month.

House Bill 1315 would shift oversight of Muncie Community Schools from an emergency manager to Ball State and strip power from Gary Community School Corp. The bill would also includes an emergency $12 million loan to keep Muncie's school district operational.

The legislation stalled during the regular legislative session that ended March 14.

Both House Speaker Brian Bosma, R-Indianapolis, and Senate President Pro Tem David Long, R-Forth Wayne, say handing over Muncie to the Ball Street is the best option given what they call the district's poor financial decision-making that led to its fiscal crisis.

"All I had to hear was that a $10 million capital bond was used for operating expenses, and as a practicing bond lawyer, I didn't have to hear anything else," Bosma said during a press conference. Bosma is a partner at Kroger, Gardis & Regas, LLP. "Fiscal irresponsibility is paramount, but also, fiscal irresponsibility translates to educational responsibility as well, so I'm enthused about Ball State."

Long said Muncie has rejected or refused to listen to years of requests get its fiscal house in order. "They continued to do the exact opposite,” Long said. “They've lost two-thirds of their kids within the last 20 years. The school district is in deep trouble."

With the exception of some technical corrections, the bill will be presented in the same form as it was on the last night of the regular legislative session.

Under the legislation, Ball State would appoint a seven-member panel to operate Muncie schools. Four of the members would be required to live in the school district. Opponents have argued that Muncie parents would lose a voting voice under that scenario.

The proposal would hand control of the Muncie district to Ball State University on July 1.

It would also remove the "distressed" label from Muncie Community Schools and provide an interest-free state loan to the district for a term of up to 10 years. The school district needs the loan because it used proceeds from a $10 million general obligation bond issued in 2014 for operating expenses instead of completing building repairs and improvements.

HB 1315 would further strip power from the Gary school board. Under the bill the already powerless trustees of Gary would become an advisory committee to the district's emergency manager, Peggy Hinckley. The board would be limited to four public meetings a year. The bill also allows the emergency manager to fire teachers before Sept. 30 of a given school year.

The bills now move to both chambers for consideration during the May 14 special legislative session.

Bosma and Long said they expect the special session to last one day.

"I'm calling lawmakers back to take action on the critical issues of school safety and federal tax conformity," Gov. Eric Holcomb said in a release. "And, with sharp focus, I'm confident they can finish this work in a single day."

“People should be concerned when they are told it will only take a day to complete what the Republicans couldn’t accomplish over two and a half months,” Rep. Terry Goodin, D-Austin, said in a statement. Democrats were against the schools proposal during the regular legislative session.

Goodin said that that the public needed ample time to consider the school takeover bill. “This is not a thing that can be idly approved without full consideration, because you are talking about the latest step to take the education of our children out of the hands of local school boards and parents and placing it under the control of Big Brother," Goodin said.

The state in a first-time action took full control of the Gary district and partial control of the Muncie district last year. The state then expanded its oversight of Muncie. Both Muncie and Gary have struggled with falling student enrollment.

Muncie has a budget deficit of $12 million mostly created by the misspending the bond proceeds. The 2014 bond issue was earmarked for badly needed improvements to school buildings.

S&P Global Ratings downgraded the Muncie Community School bonds by one notch to BB-minus on Jan. 26. It had cut the rating to junk in August, lowering it to BB from BBB-plus.

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